View full sizeBrent Wojahn/The OregonianBeaverton's Herzog-Meier Auto Center plans to launch a multi-million upgrade of its dealership, which franchises four brands including Volkswagen. The expansion coincides with an upswing in the auto industry marked each month since the start of the year with sales and manufacturing gains.

Oregon lost 300 auto dealers in the past four years, victims of a recession that halted production, detoured buyers and rocked the industry. But those that survive today see a promising market ahead, encouraged by their own sales figures and broader U.S. trends.

Automakers are boosting production and reporting growing sales. Supply chains interrupted by the Japanese tsunami are reopening. The jobless rate continues to drop and buyers are returning to car lots. The threads are weaving a sense of optimism about the market from Detroit to Portland.

"If you consider where we've been the last few years," Wilsonville auto dealer Parker Johnstone said, "we're very optimistic about what the economy holds."

Certainly, the industry has ground to gain. From 2006 through 2009, the passenger car market lost more than one-quarter of its value, falling to its lowest level since 1990.

In Oregon, new-vehicle registrations climbed 9.4 percent in the first quarter compared with the same three months of 2011. The pace is expected to pick up slightly as the year continues.

Economists predict as many as 14.4 million new-car sales in 2012, the highest level in the U.S. since 2008. Oregon looks to grab 91,500 of those sales, a 24 percent uptick from the market's recessionary low point in 2009.

"There were some very dark times over the past few years," said Greg Remensperger, executive vice president of the Oregon Automobile Dealers Association. "Business is picking back up again. I think our industry is going to lead the national recovery, as well as the local recovery."

That stands to boost the state's economy. The 240 new-car dealers have a measurable impact on Oregon's retail base, accounting for 12.4 percent of all sales in 2010.

It's also welcome news for the estimated 1,750 used-car dealers in the state, which are struggling to compete with franchised counterparts that grew their used-car businesses during the downturn. As demand for new cars increases, the reasoning goes, less room would remain on dealers' lots for pre-owned autos.

In 2010, new-car dealers sold 11.6 million new vehicles and 18 million used ones. And though the average price of new vehicles fell after 2008, the price of used wheels began to climb, in part because inventory dropped.

Automakers manufactured fewer vehicles and drivers made do with current rides. The government's Cash for Clunkers program also weeded cars from the market.

The after-effects linger in Oregon today, as dealers see fewer late-model trade-ins and nicer used cars demand higher prices.

View full sizeRandy L. Rasmussen/The Oregonian Gary Sargent has spent his entire career in the auto industry, starting at his family's Southeast Portland auto lot when he was 12 years old. As competition increased in the last decade, the business transitioned to two-wheeled vehicles, a less-crowded marketplace in Portland.

"It's Economics 101: supply and demand," said Gary Sargent, an auto industry veteran and president of the Oregon Independent Auto Dealers Association. "There's a large demand for used cars because it's what people can afford."

Thus, new-vehicle sellers say, used-auto sales remain an important income vein. And used-car dealers such as Portland's Tommy Wilson say it will take sustained new-car sales to resupply their inventories.

The business specializes in higher-end autos and commercial sales. The latter all but disappeared during the recession, Wilson said, forcing him to grow the retail segment.

Finding those cars proved difficult, as fewer rolled through the auction houses where he finds his cars. More buyers turned up, too, he said, all competing for 500 rather than 800 autos.

Because he specializes in higher-end cars, much of the competition he faces is from new-car dealers. But that will shift as new-car sales grow in the coming years, he said.

"We'll start seeing a few of those cars back at the sale only because of pure numbers," Wilson said. "They can only stock so many cars, or they have to get more property."

For now, used cars remain valuable, as they often afford sellers higher margins than new cars.

Five takeaways from Oregon's new-vehicle market during the first quarter:

Oregon buyers favor Japanese brands more than the rest of the U.S. Toyota claimed an 18.5 percent market share, the highest of all auto brands and 5.7 points higher than the national average. Subaru (8 percent) and Mazda (2.6 percent) also enjoyed greater stakes than the national average.

The reverse is true for domestic brands, with the exception of Dodge. Its 5.7 percent market share outperformed the U.S. average by 1.2 points. But Ford's 12.2 percent slice in the Oregon market made it the most popular Detroit brand, albeit below the 13.8 percent national average.

The Portland metro area sold 13,093 cars during the first three months of 2012, a 4.2 percent increase year-over-year. But central Oregon recorded the fastest growth, at 10.4 percent, with 1,308 sales.

Sales of European-made smart cars are up 267 percent, the biggest uptick of any make. The caveat: they climbed from 9 in the first quarter of 2011 to 33 during the same three months in 2012.

Sub-compact and mid-size cars were No. 1 and 2 in popularity, with the Toyota Prius and the Subaru Legacy being the top sellers in their respective categories.

Source: Oregon Automobile Dealers Association

Medford-based Lithia Motors expects nearly twice the return this year on used versus new vehicles, forecasting margins of 14.6 percent for the former and 7.8 percent for the latter.

New CEO Bryan DeBoer, son of Chairman Sidney DeBoer, has said he plans to grow the used-car side. The public company is one of the largest auto sellers in the U.S., with 83 hubs in 11 states.

New-vehicle sales at stores open at least a year, a key measure, increased 25 percent during the first three months of the year, while the same metric for used cars climbed 18 percent. It forecasts 2012 sales of $2.9 billion to $3.1 billion.

On a local scale, Jim Fisher said he typically sells more used than new cars at his Portland Volvo franchise that borders West Burnside Street. Its inventory space is limited, so he targets later-model used Volvos that appeal to customers already interested in the European brand.

Overall, the dealership's sales remained largely flat the past couple of years. That's beginning to change, he said, but at a slower pace than East Coast counterparts.

Beaverton's Herzog-Meier Auto Center has recorded three years of what partner Chris Meier described as steady growth. The dealership franchises Mazda, Mitsubishi, Volvo and Volkswagen vehicles. And as its new-car sales increase, its share of used-car sales is falling, he said.

"When the economy starts to improve the new cars are attractive," he said.

The dealership's payroll expanded in the past year to 125 people after contracting in 2007 and 2008, he said. It's also planning a multimillion-dollar upgrade, including a new Volvo building, by the close of 2013.

Dealers face pressure from manufacturers to meet their upkeep standards, especially as auto sales begin to pick up, said Remensperger, with the Oregon Auto Dealers Association. But as businesses show the first signs of recovery, required upgrades can be an expensive cost to shoulder, he said.

Its new-car business has picked up since 2009, and he expects the trend to continue, he said.

View full sizeBrent Wojahn/The OregonianHerzog-Meier Auto Center hired finance assistant Jane Finerson as auto sales began to increase at the company last year. It now employs 125 people at its Beaverton dealership, an uptick from recession-level lows, co-owner Chris Meier said.

Yet necessity buying still defines the marketplace, said Dick Withnell, owner of a Hyundai and Dodge dealership in Salem. He called himself cautiously optimistic about the current market and said his own sales are ticking up.

But buyers are coming in with older cars; the average age of vehicles on the road now tops 11 years. That's changed the trade-in landscape, he said.

"You're not getting the 1-, 2- and 3-year-old trades anymore," Withnell said. "The challenge right now is to get the used cars."

Johnstone recently hunted for a late-'90s Honda sedan for his 17-year-old daughter, eventually buying a 1999 Civic.

His dealership's used-car sales account for 30 percent of its sales volume. Altogether, sales are up 47 percent compared with this time last year, surpassing its overall goals. "For us, it's just been absolutely wonderful," he said.

View full sizeRandy L. Rasmussen/The OregonianScooters and a motorcycle fill an area at Sargents Motorsports that was once a paint booth when the company sold used cars and trucks. Now the father-son business in Southeast Portland specializes in two-wheel vehicles and ATVs.

Sargent, the longtime auto dealer, struggled for years to compete with larger sellers. For him, the breaking point arrived when a $1,200 all-terrain vehicle his son sold at auction earned more profit than a $35,000 Chevrolet SSR he auctioned.

The business pivoted its focus to scooters, motorcycles and ATVs, a less-crowded marketplace in the Portland area. Son Gary Jr. helped secure franchise agreements with up-and-coming motorcycle manufacturers Hyosung and Kymco, meaning the veteran used-car dealer became a new seller. Now 90 percent of the dealership's sales are cycles, not cars.

"That's the key word right now for survival in the automotive and power-sports industry -- be diversified," the elder Sargent said.